China’s largest fixed-line telecommunications operator China Telecom on Thursday reported a 4.5 per cent jump in net profit thanks to a steady increase in the number of 4G users and a rise in mobile service revenues.

The company’s net profit jumped to 5.35 billion yuan (US$775 million) for the first quarter of the year, compared to 5.12 billion yuan in the same period last year.

China Telecom’s mobile subscribers grew 3 per cent to 222 million in the first quarter, of which over 62 per cent are 4G subscribers.

Operating revenue for the telecom provider grew 5.8 per cent year on year to 91.43 billion yuan.

China’s telecommunications operators are expected to feel the squeeze on revenues this year after the Chinese government called for a reduction in tariffs.

In March, Premier Li Keqiang’s call for the telecommunications sector to “raise speed, drop prices” by removing domestic roaming fees and levelling out local and long-distance domestic call charges.

These fees accounted for almost 10 per cent of China Telecom’s 309.6 billion yuan in service revenues last year, the company said.

China Telecom, together with rivals China Unicom and China Mobile, have all pledged to reduce internet private line access charges for small and medium-sized enterprises, cut international call tariffs, and to stop charging mobile subscribers for domestic long-distance and roaming fees.

China Telecom stated in a filing in March that it would stop charging long-distance and roaming fees from October 1 this year, and reduce charges for international calls and the internet tariffs for small and medium enterprises this year.

On Wednesday, China Mobile announced it would cut the prices of seven initiatives from May 1, including a reduction in international calling rates, a cut in voice and data roaming rates in belt-and-road partner nations, and also introduce unlimited data plans for consumers.

Edison Lee and Timothy Chau, analysts at Jefferies Hong Kong, said in a research note that a “moderate price war is unfolding”, stating that the initiatives implemented by China Mobile this week were aimed at competing with China Unicom’s new data plan initiatives.

The latter was the first telecommunications operator to launch unlimited data plans for its customers in February this year.